Palestinian refugees fleeing their besieged camp in north Lebanon in May 2007. Saeb Erekat is recorded as referring to their rights as a bargaining chip. Photograph: Ramzi Haidar/AFP/Getty Images

The Palestinian Authority's anger over the leak of confidential documents about the stricken Middle East peace process is likely to be matched by outrage among many Palestinians at the revelation that their negotiators privately agreed that a token number of refugees, just 10,000, would be allowed to return to Israel.

There will also be anger that the chief PLO negotiator, Saeb Erekat, is recorded as referring to refugee rights as a "bargaining chip", and that he privately ruled out putting any final agreement to a referendum that would include Palestinian refugees in Lebanon and Jordan.

Erekat responded to the publication of the leaks by stating that "any proposed agreement would have to gain popular support through a national referendum. No agreement will be signed without the approval of the Palestinian people."

But behind closed doors in a March 2007 meeting, the documents record him telling the Belgian foreign minister: "I never said the diaspora will vote. It's not going to happen. The referendum will be for Palestinians in Gaza, the West Bank and East Jerusalem. Can't do it in Lebanon. Can't do it in Jordan."

Refugees have been at the heart of the Israeli-Palestinian conflict since the 1948 war, so any deal on numbers is politically charged for both sides. Palestinians see the flight or expulsion of refugees at the time of the creation of Israel in 1948 as their catastrophe (nakba). Israelis retort that implementation of the Palestinian right of return is not compatible with the survival of a democratic Jewish majority state.

Israel pushed for a US-led "international mechanism" to handle compensation, but opposed restitution for property. The Israelis were prepared to acknowledge the "suffering" of the Palestinians during confidential talks in 2007-08, but would not acknowledge overall responsibility for the refugee problem.

"In our point of view this is basically asking us to take on their (Palestinian) narrative," said negotiator Tal Becker, Erekat's opposite number.

The documents reveal that Olmert first offered a figure of 5,000 refugees over five years on "humanitarian" grounds as part of the "package deal" he presented to Abbas in August 2008. PLO lawyers responded that that was "not serious and cannot be accepted".

Olmert has said only that the refugee figure he offered Abbas was less than 25,000. Former US president George Bush referred in his memoir, Decision Points, to a "limited number".In 2007 a PLO document cited a figure of 100,000 refugees over 10 years as a core principle.

Abbas, himself a 1948 refugee, privately argued against the large-scale return of refugees in a meeting in March 2009: "On numbers of refugees, it is illogical to ask Israel to take 5 million, or indeed 1 million," he told officials. "That would mean the end of Israel."

Critics of the Ramallah-based Palestinian leadership, within the PLO as well as the Islamist movement Hamas, will be angered by the concession, while many Israeli Jews regard any return of refugees or their descendants as unacceptable.

Tzipi Livni, Israeli foreign minister and lead negotiator in the 2008 talks, made clear in an interview last month that she was implacably against any refugee return. "The Palestinians know my position on this and so does the entire Arab world," she said. Indeed, the papers reveal Livni saying in the negotiations: "Your state will be the answer to all Palestinians, including refugees".

• This article was amended on 18 February 2011: the original said a document sent by Saeb Erekat to EU diplomats stated the Palestinians had agreed the return of 15,000 refugees to Israel. We omitted to say this was 15,000 a year for 10 years, as the linked Haaretz article makes clear. This was the figure the PA was reportedly willing to accept and not, as originally said, an Israeli proposal. The relevant sentence has been corrected.